Mail Cutback Urged

By William H. JonesBy William H. JonesApril 19, 1977

A special federal commission recommended yesterday that Saturday mail deliveries be eliminated and service the rest of the week be slowed down, but that the annual federal subsidy to the Postal Service be increased.

Even with the cutbacks and higher federal aid, the commission said, first-class rates will climb to 22 cents an ounce by 1985 from 13 cents today. If current services are maintained and there is no boost in subsidies, the first-class rate in 1985 would be 28 cents, the commission stated.

The steps it is proposing are the only way to combat the postal system's soaring deficits, the commission declared. It advocated retraining the system's present organizational structure as a quasi-independent agency.

The advisory group, established last year by Congress, also called on the Postal Service to give more serious attention to the development of electronic systems to move part of the mail and it chided current postal management for ignoring new communications technologies.

Commission chairman Gaylord Freeman, retired chairman of the First National Bank of Chicago, told reporters yesterday the long-range outlook for the nation's post office system is "disastrous" unless steps are taken to attract users who will switch from first-class mail delivery to some form of electronic communition with private industry.

He said about half the current first-class volume consists of financial transactions - bills, checks in payment, receipts - that eventually will be reduced as more and more payments are transferred electronically from one bank of another.

Another commission member, Paul J. Krebs, warned that first-class stamps could cost $1 or more in the 1980s if use of the Postal Service declines and no alternative electronic system is established. "We are talking about preserving a government service," he said, seeking to rebut the view of some in postal management that the service should not involve itself in new technology in competition with private industry.

The most controversial recommendations by the commission are a reduction in delivery service to five days a week, a cutback in some overnight sorting operations that would lead to delayed deliveries, and retention of the Postal Service board of governors, which would continue to appoint the Postmaster General.

The White House had no coment yesterday on the commission's recommendations but key members of Congress expressed unhappiness with the report, which backed most major proposals of the current Postmaster General, Benjamin F. Bailar.

Rep. James M. Hanley (D-N.Y.), chairman of the Subcommittee on Postal Service, said: "Oh balance, I'm disappointed." Instead of emphasizing improved service, Hanley complained, the commission focused on "how to cut service." Congress created the commission after it was called upon to appropriate an extra $1 billion for the Postal Service last year.

Hanley, who said his subcommittee will begin hearings April 28 on various reform proposals, said he was "particularly disappointed" that the commission did not recommend abolishing the board of governors, which he accused of "gross inefficiency."

Elimination of one delivery a week would save $412 million a year. It was supported by 80 per cent of the respondents to a special A. C. Nielsen Co. opinion survey conducted for the commission, if the alternative was higher mail rates.

However, commission vice chairman James H. Rademacher, former president of the National Association of Letter Carriers union dissented on this issue, saving a cutback in Saturday deliveries would save very little.

Where the majority called for an increase in the annual subsidy from the current $920 million to 10 per cent of annual expenses, Rademacher said the subsidy should be 13 per cent to maintain Saturday deliveries.

For the last fiscal year, a 10 per cent federal subsidy would have been about $1.4 billion.

In addition, the commission advocated an immediate $625 million appropriation to wipe out past deficits, and continued subsidies of $700 million a year to offset reduced rate increases on periodicals, which are being raised gradually.

The commission also recommended legislation permitting postal authorities to charge some types of users less than full costs of service, saying this would allow the post office to be more competitive by reducing non-first-class rates.